Editor’s Corner—Cable’s fiber deep, remote PHY plans spell opportunity for optical vendors, network construction outfits

Sean Buckley

As I make my way to OFC again—which was one of the first trade shows I ever attended back in 1999—the one trend that has hit me lately is  what optical vendors and construction providers stand to gain from cable’s pending fiber deep and remote PHY initiatives. 

Cable operators’ moves to drive fiber deeper into their networks to satisfy a growing array of next-gen bandwidth capabilities for consumers and business customers is creating a potential revenue source for a host of optical vendors as well as network construction and engineering companies.

So just what are these initiatives that cable has planned?

As its name implies, fiber deep is the concept where cable MSOs push fiber ever closer to customers to provide consumer and business customers better service. By amplifiers and pushes the optical-to-electrical conversion closer to subscribers, cable MSOs can increase potential bandwidth to homes and businesses while reducing power and maintenance costs.

Charter, Comcast, Cox and others are rolling out and expanding fiber-based services and DOCSIS 3.1 services for consumer and business customers.

Comcast Business has continued to ramp up its fiber network to serve more business parks. In Portsmouth, New Hampshire’s Pease Tradeport, Comcast extended its fiber network to provide tenants up to 10 Gbps as well as cloud and related services, for example. The cable operator has also been expanding its fiber network in various other regions including Montgomery County, Maryland and its hometown of Philadelphia.

Charter, meanwhile, gained a larger fiber foothold when it completed its acquisitions of Time Warner Cable and Bright House.

These fiber expansions certainly helped Charter and Comcast drive up strong small to medium business (SMB) and even medium and large business service revenue growth during their fourth quarter earnings period.  

Besides deep fiber, there’s also Remote PHY.

As defined by Cable Labs, Remote PHY involves cable operators pushing the QAM modulation/demodulation portion of their CMTS out from their hub or cabinet and toward the edge of their network. Remote PHY, which supports DOCSIS 3.0 and DOCSIS 3.1 deployments, allows for an integrated converged cable access platforms (CCAP) to be separated into two components: a CCAP core and the Remote PHY device that describes the interfaces between them.

Traditional cable vendors like Arris are seeing some early acceptance of platforms that support Remote PHY. Comcast, Grande, TDS and WOW in the U.S.; and NOS Comunicações, LIWEST and TOYA in Europe are among seven customers that adopted Arris’ E6000 Converged Cable Access Platform (CCAP).

Meanwhile, regional cable operators like Midco see Remote PHY to extend its DOCSIS 3.1 services to rural areas that don’t require a centralized CMTS or CCAP systems.

An emerging optical vendor target

While optical vendors Ciena and Infinera cited spending caution from telcos as the industry wades through yet another round of consolidation in their fourth quarter 2017 earnings reports, these companies expressed a thesis that cable is seeking more optical gear to support a densification of their fiber network facilities.

Ciena, which secured its second cable MSO for fiber densification during the fourth quarter of 2017, said this concept is starting to become a more frequent topic of conversation with its customers.

Jim Moylan, CFO of Ciena, told investors that cable is currently conducting small deployments and testing.

“With fiber deep this year, I'd characterize it as people are putting early deployments and testing the architecture, et cetera,” Moylan said during the earnings call, according to a Seeking Alpha earnings transcript. “I do think we'll see some revenue in the second half, and that is encompassed in our thinking about the year. But I think you won't see this sort of larger ramp until 2019 in North America.”

Likewise, Infinera is seeing a similar trend.

“We continue to believe cable operators' fiber-deep strategies represent a major incremental revenue opportunity for optical networking companies, including Infinera,” said Tom Fallon, CEO of Infinera during its fourth quarter earnings call, according to a Seeking Alpha earnings transcript. “Fiber-deep will take two orders of magnitude more traffic to the metro edge, requiring significant deployments of optical gear.”

Infinera says that it will respond to cable’s Remote PHY opportunity with a host of new products and architectures that Fallon says will integrate across number of its products during what it says phase 2 of its evolution to serve what could be a decade-long evolution.

“We are working on some new products, some new architectures that integrate across a couple of our products providing a solution,” Fallon said. “It's not just a product, but it's a solution that integrates software in a couple of different hardware platforms to handle the transport part of it.”

Contractors see dollar signs

But the optical vendors aren’t the only ones that will benefit from cable’s remote PHY and fiber deep plans.

Network construction providers like Dycom, which count Comcast and Charter as some of its largest customers, are seeing an opportunity to raise their network construction and engineering service revenues.

Steven Nielsen, CEO of Dycom, noted during the company’s earnings call that fiber-deep deployments to expand capacity and address Greenfield new build opportunities are rising, particularly to support business services.

“Cable operators are deploying fiber to small and medium businesses and enterprises,” Nielsen said during the earnings call, according to a Seeking Alpha transcript. “These deployments are often in anticipation of the customer sales process as confidence in the number of existing customers continue to increase.”

What’s making Nielsen confident about the cable market is two-fold: capex plans by Cox and others to drive more fiber into their networks as well as DOCSIS duplex.

“Cox talks about a 10-year spending plan to push fiber-deep into their networks,” Nielsen said. “There is a new technical standard that people expect to settle in 2019 called DOCSIS duplex, [which] creates pretty robust upstream and downstream capabilities. It can be deployed in various ways, but I think it's most likely to be deployed by pushing fiber-deep.”

Fiber deep and Remote PHY may still be in early stages of adoption by cable operators, but it’s clear that these concepts setting the stage for optical vendors and network construction companies to strengthen their bond with an industry segment set on evolving. Those players that can capitalize on these concept with necessary solutions could gain a new revenue source as the telcos head through a rapid phase of consolidation.—Sean @FierceTelecom